Can an Appraiser Perform Consulting Assignments on Real Property Matters?

This is Diana with ABC-The Appraiser’s Business Companion. I recently heard an appraiser make a comment, “Since they removed Standard 4 and 5 which used to be Appraisal Consulting Assignments (now they are split into Appraisal Review Reporting and Mass Appraisal Development), the appraiser can’t do Consulting work, it’s a violation of USPAP.” Wow, how did we get so far away from understanding USPAP?

It’s important this confusion be made clear. Appraisers have skills that go beyond developing and reporting an appraisal or an appraisal review. Those skills can be used to divert their practices into other profitable ventures and Consulting on Real Property Interest is one of those areas where those skills may be used. Look at the chart developed by the Appraiser’s Standard’s Board (ASB), illustrating this point in Advisory Opinion 19.

Don’t forget that while conducting a valuation service outside the specificity of USPAP Standards such as an appraisal or appraisal review it is crucial that the performance is in compliance with the Ethics and Competency Rule when acting as an appraiser. The specific directives of the Ethics Rule speak to the need for clear understanding. In the conduct subsection of the Ethics Rule it states in part, “must not advocate the cause or interest of any other party or issue; “. Note in the chart excerpt in the far-right column. Acting as a consultant in that capacity, where advocacy is the role of the valuation service provider, you must not misrepresent your role. You are not acting as an appraiser, which brings me to the next item of understanding. Just as you define the problem of your valuation service, you must also define your role as the Consultant.

When you sign your consulting report with your state certification beneath the name, which role are you playing? When acting as an appraiser, providing the consulting service, the signature with the state certification makes it known you are offering your opinions and conclusions based on your appraisal expertise. At that point, even though there are no specific standards that govern that valuation service, you would be conveying a role of offering this consulting advice, albeit a Market Analysis, Market Study, Feasibility Study or Highest and Best Use, under the expectation of adherence to the Ethics Rule and the Competency Rule.

If you’re not signing your name followed by the statutory qualification of an appraiser, then you are not saying to the public that your opinion is based on your appraisal expertise. At that point you are acting as a consultant based on other expertise that would not be confused with your state certification expertise. You have made it clear you are not wearing your appraiser hat. That is what Advisory Opinion 19 is defining for the appraisers and the users of appraisal services. When you sit down in front of the computer and write your consulting hat, which hat are you wearing?

Don’t limit yourself as an appraiser; there are many opportunities to expand your business by going outside the arena of performing an appraisal or an appraisal review. Just be clear as to what type of valuation service you’re providing and don’t misrepresent your role as an appraiser.

This is Diana Jacob and you’ve just had a tip of the week from ABC – The Appraiser’s Business Companion.